15 ms·

SkyMall's SkyFall

309 points by DavidChouinard 13y ago

deleted 13y ago
[deleted]
draz 13y ago
I propose a 4th reason why they merged with Xhibit: the owners of SkyMall realized that with WiFi becoming more and more prominent on flights, bored traveler are less and less likely to flip through their magazines, but instead get online (where they'd have their own set of advertisements, shopping capabilities, etc). I think, therefore, it was the right move to cash out before companies themselves pull out of their agreements with SkyMall.
- UnoriginalGuy 13y ago
  I think you're massively overstating how common WiFi is. First off it only exists over certain land areas, and secondly it is so costly on most flights few are paying for it ($35 for a 60 minute flight? Uhh no thanks). Plus you'd still read Skymall during takeoff/landing where electronic devices are banned.
  - jmathai 13y ago
    I think you're massively underestimating the future trend. More flights will have wifi for cheaper. Not less for more money. Sure, from the looks of today it might not seem like a big disruption for SkyMall but it will. On most flights I go on I'd say about 10-20% of the folks have a tablet device. That trend will also go up and continue to decrease the effectiveness of SkyMall.
    - throwaway1979 13y ago
      On what basis do you claim that "most flights will have wifi for cheaper"? There really isn't much competition when you are at 10,000 feet. Also, if airlines wanted to differentiate themselves based on quality, they had ample opportunity to do so. From my understanding, for coach seats in the US, airlines compete solely based on price.
      - marvin 13y ago
        European low-cost airline Norwegian currently has free wi-fi on all their European flights. I'm pretty sure this trend will continue - it's a relatively inexpensive way for airlines to differentiate themselves from their competition.
      - jmathai 13y ago
        I doubt wifi will get more expensive or be less common on airplanes in 4 years. But sure, assume it will. SkyMall would still have to compete with tablets that passengers carry. I can't site a research paper to back this up though.
    - throwaway9848 13y ago
      Great thought. That's why SkyMall (profitable, $100M+ revenue) should merge with an unprofitable reverse-merger OTC trading company that is unprofitable with $10M trailing revenue on 40/60 terms. Instead of doing that, maybe they could have hired technical staff and built a mobile app themselves?
      - draz 13y ago
        I actually thought of that, but I realized that BoingBoing (and the like) beat them to it but being the gatekeeper to the internet. From last I've seen, they have their own shopping portal (and Amazon was access was complimentary). Why would I go out of my way to download the SkyMall app? What value would it give me?
        jmathai 13y ago
        The only way I see that working is if the airline somehow made it possible to install the SkyMall app and use it. Providing the app exclusive access to communicate back down to earth. I know it's possible because the last flight I was on did it for Ebay. You could surf Ebay for free without having to pay for Wifi. I wouldn't be on this approach working for SkyMall though.
  - 27182818284 13y ago
    Well it doesn't have to be 100% right now for people to be able to read the writing on the wall, right? They can look at trends and see Wifi adoption going up and legitimately worry about it even though not a lot of flights today have Wifi.
  - JumpCrisscross 13y ago
    The people likely to pay for WiFi are also likely to be valuable Skymall customers. E.g. I always buy WiFi on domestic flights and haven't touched an issue of Skymall in years. I have, however, made Amazon purchases while flying.
  - moistgorilla 13y ago
    On delta I've been paying around 5 dollars for flight long wifi
  - rhizome 13y ago
    Next time you're on a flight, scroll down on the wifi rates. I noticed that the top option was something like you mention, $35 or whatever per day. However, a few packages below the "per day" rate was a "duration of the flight" rate that was somewhat cheaper, like half or less.
  - ecspike 13y ago
    On many of the airlines that have Wifi, Delta has it on most of their mainline fleet, also have free ebay or amazon even if you don't get the wifi. The cost is closer to $12-15 for a long haul and as little as $5-7 for a mobile device or shorthaul or with a coupon pack.
  - jthol 13y ago
    from http://www.southwest.com/wifi/ http://www.southwest.com/wifi/ > Internet access will be available for $8 all day, per device and will be displayed once you launch your internet browser and connect above 10,000 feet*. This trend will continue and expand.
  - mikeash 13y ago
    Satellite-based global coverage is becoming a reality. Lufthansa, for example, has coverage on some transatlantic flights. United is currently in the process of installing WiFi on every flight, including over-water flights.
- cstross 13y ago
  It's not just wifi on flights: if these reports are correct, the FAA is considering relaxing restrictions on electronics during take-off and landing: http://arstechnica.com/tech-policy/2013/06/stow-it-no-more-faa-easing-ban-on-electronics-during-takeoff-landing/ http://arstechnica.com/tech-policy/2013/06/stow-it-no-more-f... If this happens, then SkyMall's market just disintegrated like a wet telephone book -- they're competing with Amazon et al from boarding to arrival at the destination gate. Even without in-flight wifi, travelers who forgot to pack a book or magazine are no longer going to be a captive audience, so that 70% eyeball share will crash.
  - larrys 13y ago
    "they're competing with Amazon et al" The product that skymall is selling is entertainment. The value of being able to leaf through a magazine and see some interesting products. And maybe buy something you would never think of. Just like HN is a venue to read things you might not come across in your own browsing. Skymall pushes product into easy viewing site because they are a printed magazine right at your fingertips. Now of course you can do that online but you are in a confined space and a captive audience and that magazine has appeal plain and simple no matter what you can take a look at online. And of course you have plenty of entertainment on your tablet or laptop. But this is in a different format and it deserves at least a look. Let me make up an outlandish example. You have hotel wifi and a tablet in your private hotel room. You then spot a magazine of pornographic pictures in a drawer and that type of stuff turns you on (as it does most men, right?). Even if you can view the porn online you are still going to leaf through the magazine because it's easy to do and just "take a look" for the entertainment value. (That's quite different from actually buying the same magazine in the store in the hotel).
    - pubby 13y ago
      >The product that skymall is selling is entertainment. Their advantage over amazon may be the entertainment value, but it seems improper to say they're "selling entertainment" when realistically they're selling ads. I don't see the connection to porno magazines since they're completely different business models.
- jarrett 13y ago
  As the owners of SkyMall, how would you cash out on this deal? As I understand it, Xhibit didn't pay cash for SkyMall. I take this to be a stock-for-stock merger. So the owners of SkyMall end up with a stake in Xhibit but not cash. You might argue that the SkyMall people could sell their stock now. But if Xhibit is as much of s sham as the authors say, then it's going to be hard or impossible to cash out at a good price. Once you start selling the shares of an artificially inflated company, the price falls fast. You might unload a few at a high price, but just a few.
- jsight 13y ago
  I've been on flights where inflight wifi was $$, but inflight WiFi access to Skymall was free. I don't think the growing availability of Wifi will hurt them among the type of people who buy their overpriced (and often useless) merchandise.
Afforess 13y ago
Seems like a fitting fate for Skymall. A company that profits by selling overpriced shiny garbage is bought by an overpriced and shiny company, that is garbage.
- larrys 13y ago
  "selling overpriced shiny garbage " People are free to try to locate that "shiny garbage" and buy it cheaper but yet some people continue to purchase those things from skymall either because they are a) in a hurry b) money is no object c) product is unique enough that it can't be easily found Here's a question. One of the problems people have is app discovery. What if there was a magazine onboard airplanes where you could advertise cost effectively and get distribution for an app? Wouldn't you see that as providing some value just like any advertising?
  - Afforess 13y ago
    They have a captive audience (bored passengers in airlines) and the shiny things they sell appeal to consumers with no self-restraint. The value they provide is nearly zero. They exist and make money due to a complete lack of competition and an endless stream of idiots. I say good riddance.
    - larrys 13y ago
      "shiny things they sell appeal to consumers with no self-restraint." Where are you drawing this conclusion from? Perhaps there are people who like to spend money and buy things because it gives them a rush and makes them feel good. Same as people will spend money on other feel good things (like a ball game or a concert, a movie or a play or play an online game). What exactly is wrong with buying "shiny things"? And they don't lack competition as many of the things in the catalog can be located elsewhere. After all you still need to order and have it shipped to you. Look stores in the terminal have a business model that depends on a captive audience as well and the pricing for many items is certainly higher than it would be in other locations. Why shouldn't it be? This is capitalism and there is nothing wrong with it at all.
eksith 13y ago
Funny thing is, I've browsed through for some ideas for electronics projects (not to use as-is, mind you, just to fiddle with) and found parts at wholesalers. What can I say, they were a handy supply of barely usable, often unnecessary rubbish, but as a museum of oddities and bad ideas, it was rather inspiring.
ErikAugust 13y ago
Xhibit's "Twityap": http://www.twityap.com/ http://www.twityap.com/ What an insulting joke. Looks like their Twitter account was suspended: https://twitter.com/TwitYap https://twitter.com/TwitYap Elancer from Punjab who put the app together has a couple screenshots: https://www.elance.com/samples/twityap-android/71857479/ https://www.elance.com/samples/twityap-android/71857479/ Totally funny stuff...
- andrewflnr 13y ago
  In any other context I would have assumed anything named "twityap" was a parody. I'm still having a hard time believing it's not.
- reedlaw 13y ago
  How is it that Xhibit has so many faces on it's About Us[1] page but they still had to hire an elancer? Did they make the iOS version and out-source Android development? 1. http://www.xhibitcorp.com/about-us http://www.xhibitcorp.com/about-us
  - 3825 13y ago
    That sounds about right. There is no mention of the word Android on the page that I could find.
  - sgustard 13y ago
    Their engineering office is in Bosnia. Source: http://www.linkedin.com/profile/view?id=84644729 http://www.linkedin.com/profile/view?id=84644729
    - ErikAugust 13y ago
      Right, and I think their "office" is just devs they work with on Elance, really: https://www.elance.com/s/mirkoj/ https://www.elance.com/s/mirkoj/
  - unreal37 13y ago
    Why do they have Facebook Like buttons for each of their employees? Is this a corporate website, or Hot or Not?
awongh 13y ago
twityap?!? you can't make this stuff up. It's sad that this might work to get people to part with their money.
rohin 13y ago
Author here. We published this about a month and a half ago so the stock price information in the post is out of date. Since then, the stock price of the acquiring company (XBTC) has fallen roughly in half. http://finance.yahoo.com/echarts?s=XBTC+Interactive#symbol=XBTC;range=2y http://finance.yahoo.com/echarts?s=XBTC+Interactive#symbol=X...
- dmix 13y ago
  So they're basically a company doing adwords PPC/CPA (cost-per-action) campaigns and they managed to become public via reverse takeover? A big portion of the PPC industry has always been shady. I build software for diabetics and constantly came across highly-optimized landing pages promising to cure diabetes for $99. With highly questionable diets or videos. They buy up all the expensive adwords health keywords (competing with big pharma), so they must be raking in money. I also have friends who worked as adwords marketers for people making millions selling non-FDA approved health products (for ex. cleansers and skin bleaching products).
  - callmeed 13y ago
    My wife got scammed by one of those nutraceutical "trials" once. You get some sample pills on a 14-day trial. The phone number to cancel the trial is disconnected. 14 days later, your card gets charged $80. I've noticed a lot of them advertising on Facebook.
    - 3825 13y ago
      did you try to charge back?
      - jusben1369 13y ago
        He may not of but apparently a lot do per the article and 10-K )
- throwaway9848 13y ago
  Is there any reason you know for the decline outside of your article? Has the merger hit snags since then? Did you ever look into the 10%+ beneficial holder "XSE LLC".
skybrian 13y ago
I think the most plausible scenario is that SkyMall wasn't a good investment to begin with, so their private investors dumped them. We have no hard numbers. Magazine advertisers often don't pay list price for ads and their expenses are private deals with the airlines, who are likely to drive a hard bargain if they can. And I'd be skeptical about how many people actually read them regularly; a survey commissioned by the company could be exaggerated or flawed in some way.
jwheeler79 13y ago
From their 10-K: "We owe $375,000 at a fixed interest charge of ten percent (10%) regardless of the time of repayment to four shareholders due March 31, 2014" That means they issued a 10% bond sale that four dumbshits, already holding common shares, bought into. A 10% bond! When spain was on the verge of insolvency, they were issuing bonds at 7%
- ratsbane 13y ago
  This is crazy. "fixed interest charge of ten percent (10%) regardless of the time of repayment" Does that mean, as it sounds, that the interest is $37,500 whether they pay it back in ten days or ten years? I realize it's due March 31, 2014, but if it's not paid by when it's due, no more interest accrues?
  - pbhjpbhj 13y ago
    I don't know anything about the specifics here but if it helps interest that is fixed is fixed pro term. So "fixed interest mortgage rate of 5%" is actually 5% per annum. If they don't pay it back they continue to accrue a [presumably compounded] 10% charge.
toble 13y ago
Couldn't there be lots of other reasons? Like the current owners may have been forced to do it? From reading the article, I got the impression that this business was being passed around like a toy. Are the previous owners indirectly linked to investors in the airlines that carry the catalogue? Or members of the same club? I think I have watched too many detective shows, but there you go.
aresant 13y ago
Here's what I think happened: a) Xhibit has built a solid digital agency team on the back of nutraceutical affiliate marketing offers, and enough revenue to support a trailing $300 - 500m valuation. But they realize their business isn't sustainable, and want to unlock the value of their team & experience with a larger play. They have failed at doing this with their own projects. b) Najafi Companies, that originally owned Skymall, recognizes that the continued move to digital will eventually, and probably quite rapidly, decimate what is effectively a print advertising business in Skymall. They need a forward looking strategy, and a team that can execute said strategy ASAP. c) Given that both companies are in Phoenix, a fit is recognized, and Skymall's recently appointed CEO Kevin Weiss is named CEO of the merged organizations. They sign him to a 5-year agreement to develop the digital strategy for Skymall and, given his background at "Author Solutions" which shows his experience in transitioning print-to-digital, this makes sense. d) They hatched this plan when Xhibit's CEO met Skymall's CEO standing in line to use the restroom at a Phoenix Sun's game (a team that Najafi Companies has an investment in). (1) http://biz.yahoo.com/e/130621/xbtc8-k.html http://biz.yahoo.com/e/130621/xbtc8-k.html
- rohin 13y ago
  I'd suggest listening to this interview with the the CEO of Xhibit for even a few minutes to get a sense of the kind of "value" their team is bringing to the table. http://www.youtube.com/watch?v=bfA165MFcBI http://www.youtube.com/watch?v=bfA165MFcBI
  - acchow 13y ago
    His meandering string of banal platitudes and buzzwords is seriously next level: "I personally refer to Xhibit as a multi-dimensional digital ad agency. Our gaol was to build a company with combined strengths of design, development, and distribution, to be a one stop shop for a clients digital marketing and advertising needs. Our synergistic array of software suites, tools, and offerings have been engineered from the ground up to help companies maximize results from digital strategies. I really want to emphasize results, Nick. Since we build our concepts from the ground up to help businesses maximize revenue, I always have the belief that if a client made money from a marketing campaign, they will in turn spend more money. This is why we have integrated some performance result models into our work today. The long term success any business or product relies on monetization."
cpks 13y ago
Last time I saw something like this, threats from the Russian mafia to the selling party were involved. No kidding.
lifeisstillgood 13y ago
Isn't the simplest explanation the best? SkyMall was simply made an offer they couldn't refuse. Don't sell horses heads in the magazine do they?
adamtait 13y ago
I guess when Priceonomics finds their business model has also fallen on hard times, they can resort to ... uh ... journalism.
chipsy 13y ago
As someone who has had the misfortune of holding this type of scam stock in the past, I have great sympathies for the shareholders. There are all sorts of ways you can find yourself holding a worthless investment(myself, via the entreaties of an overly enthusiastic and gullible friend) but once you have it, the rationalization machinery is going to kick in deeply, because now you're a sucker, and you really don't want to feel like one. That's why there's often a lot of online noise generated around obviously bad companies like Xhibit - it only takes the slightest big of hope to keep people in as the price plummets.
throwaway9848 13y ago
According to Yahoo! the Xhibit CTO makes $3K/year. Three thousand dollars. http://finance.yahoo.com/q/pr?s=XBTC+Profile http://finance.yahoo.com/q/pr?s=XBTC+Profile
circa 13y ago
So Xhibit is faceblock?
unreal37 13y ago
Option #4, the old owners of Skymall financially benefit from the deal regardless of the up and down of the stock price. What if current holders of xhibit stock are the ones getting scammed here?
- andyakb 13y ago
  How would that be the case?
cmccabe 13y ago
I thought Xhibit was a rapper or something. Also-- Twityap? Is that for real?
dschiptsov 13y ago
Nothing to see here. In general, being a cheater is much more efficient strategy than being a working drone, and, on the other side requires much less actual skills. This is why, for example, so many people struggling to create an appearance of competence and success, without actually possessing any appropriate skills or qualities. Their overconfidence sometimes fools simpleminded neighbors. Creating an empty-shell companies based on buzzwords, bandwagon effect and spikes of mass hysteria in order to gain ballooned valuation via media campaigns and staged "acquisitions" is a normal practice nowadays. The nonsensical valuation of companies such as Zynga are canonical examples. Using just appearance and media manipulations to create an association between few buzzwords, a brand and ignorant snap-judgement - "oh, that is a cloud virtualization mobile stock" or, you know, MongoDB - "instant gratification and productivity (of ignorant)" is a new-normal. The exit strategy could be a fail fail due to "bad economy", while pocketing all the money, or, if lucky, sale to a bigger fool, but first one is much easier.

309 points by DavidChouinard 13y ago

deleted 13y ago

[deleted]

draz 13y ago

I propose a 4th reason why they merged with Xhibit: the owners of SkyMall realized that with WiFi becoming more and more prominent on flights, bored traveler are less and less likely to flip through their magazines, but instead get online (where they'd have their own set of advertisements, shopping capabilities, etc). I think, therefore, it was the right move to cash out before companies themselves pull out of their agreements with SkyMall.

UnoriginalGuy 13y ago
I think you're massively overstating how common WiFi is. First off it only exists over certain land areas, and secondly it is so costly on most flights few are paying for it ($35 for a 60 minute flight? Uhh no thanks). Plus you'd still read Skymall during takeoff/landing where electronic devices are banned.
- jmathai 13y ago
  I think you're massively underestimating the future trend. More flights will have wifi for cheaper. Not less for more money. Sure, from the looks of today it might not seem like a big disruption for SkyMall but it will. On most flights I go on I'd say about 10-20% of the folks have a tablet device. That trend will also go up and continue to decrease the effectiveness of SkyMall.
  - throwaway1979 13y ago
    On what basis do you claim that "most flights will have wifi for cheaper"? There really isn't much competition when you are at 10,000 feet. Also, if airlines wanted to differentiate themselves based on quality, they had ample opportunity to do so. From my understanding, for coach seats in the US, airlines compete solely based on price.
    - marvin 13y ago
      European low-cost airline Norwegian currently has free wi-fi on all their European flights. I'm pretty sure this trend will continue - it's a relatively inexpensive way for airlines to differentiate themselves from their competition.
    - jmathai 13y ago
      I doubt wifi will get more expensive or be less common on airplanes in 4 years. But sure, assume it will. SkyMall would still have to compete with tablets that passengers carry. I can't site a research paper to back this up though.
  - throwaway9848 13y ago
    Great thought. That's why SkyMall (profitable, $100M+ revenue) should merge with an unprofitable reverse-merger OTC trading company that is unprofitable with $10M trailing revenue on 40/60 terms. Instead of doing that, maybe they could have hired technical staff and built a mobile app themselves?
    - draz 13y ago
      I actually thought of that, but I realized that BoingBoing (and the like) beat them to it but being the gatekeeper to the internet. From last I've seen, they have their own shopping portal (and Amazon was access was complimentary). Why would I go out of my way to download the SkyMall app? What value would it give me?
      - jmathai 13y ago
        The only way I see that working is if the airline somehow made it possible to install the SkyMall app and use it. Providing the app exclusive access to communicate back down to earth. I know it's possible because the last flight I was on did it for Ebay. You could surf Ebay for free without having to pay for Wifi. I wouldn't be on this approach working for SkyMall though.
- 27182818284 13y ago
  Well it doesn't have to be 100% right now for people to be able to read the writing on the wall, right? They can look at trends and see Wifi adoption going up and legitimately worry about it even though not a lot of flights today have Wifi.
- JumpCrisscross 13y ago
  The people likely to pay for WiFi are also likely to be valuable Skymall customers. E.g. I always buy WiFi on domestic flights and haven't touched an issue of Skymall in years. I have, however, made Amazon purchases while flying.
- moistgorilla 13y ago
  On delta I've been paying around 5 dollars for flight long wifi
- rhizome 13y ago
  Next time you're on a flight, scroll down on the wifi rates. I noticed that the top option was something like you mention, $35 or whatever per day. However, a few packages below the "per day" rate was a "duration of the flight" rate that was somewhat cheaper, like half or less.
- ecspike 13y ago
  On many of the airlines that have Wifi, Delta has it on most of their mainline fleet, also have free ebay or amazon even if you don't get the wifi. The cost is closer to $12-15 for a long haul and as little as $5-7 for a mobile device or shorthaul or with a coupon pack.
- jthol 13y ago
  from http://www.southwest.com/wifi/ http://www.southwest.com/wifi/ > Internet access will be available for $8 all day, per device and will be displayed once you launch your internet browser and connect above 10,000 feet*. This trend will continue and expand.
- mikeash 13y ago
  Satellite-based global coverage is becoming a reality. Lufthansa, for example, has coverage on some transatlantic flights. United is currently in the process of installing WiFi on every flight, including over-water flights.
cstross 13y ago
It's not just wifi on flights: if these reports are correct, the FAA is considering relaxing restrictions on electronics during take-off and landing: http://arstechnica.com/tech-policy/2013/06/stow-it-no-more-faa-easing-ban-on-electronics-during-takeoff-landing/ http://arstechnica.com/tech-policy/2013/06/stow-it-no-more-f... If this happens, then SkyMall's market just disintegrated like a wet telephone book -- they're competing with Amazon et al from boarding to arrival at the destination gate. Even without in-flight wifi, travelers who forgot to pack a book or magazine are no longer going to be a captive audience, so that 70% eyeball share will crash.
- larrys 13y ago
  "they're competing with Amazon et al" The product that skymall is selling is entertainment. The value of being able to leaf through a magazine and see some interesting products. And maybe buy something you would never think of. Just like HN is a venue to read things you might not come across in your own browsing. Skymall pushes product into easy viewing site because they are a printed magazine right at your fingertips. Now of course you can do that online but you are in a confined space and a captive audience and that magazine has appeal plain and simple no matter what you can take a look at online. And of course you have plenty of entertainment on your tablet or laptop. But this is in a different format and it deserves at least a look. Let me make up an outlandish example. You have hotel wifi and a tablet in your private hotel room. You then spot a magazine of pornographic pictures in a drawer and that type of stuff turns you on (as it does most men, right?). Even if you can view the porn online you are still going to leaf through the magazine because it's easy to do and just "take a look" for the entertainment value. (That's quite different from actually buying the same magazine in the store in the hotel).
  - pubby 13y ago
    >The product that skymall is selling is entertainment. Their advantage over amazon may be the entertainment value, but it seems improper to say they're "selling entertainment" when realistically they're selling ads. I don't see the connection to porno magazines since they're completely different business models.
jarrett 13y ago
As the owners of SkyMall, how would you cash out on this deal? As I understand it, Xhibit didn't pay cash for SkyMall. I take this to be a stock-for-stock merger. So the owners of SkyMall end up with a stake in Xhibit but not cash. You might argue that the SkyMall people could sell their stock now. But if Xhibit is as much of s sham as the authors say, then it's going to be hard or impossible to cash out at a good price. Once you start selling the shares of an artificially inflated company, the price falls fast. You might unload a few at a high price, but just a few.
jsight 13y ago
I've been on flights where inflight wifi was $$, but inflight WiFi access to Skymall was free. I don't think the growing availability of Wifi will hurt them among the type of people who buy their overpriced (and often useless) merchandise.

Afforess 13y ago

Seems like a fitting fate for Skymall. A company that profits by selling overpriced shiny garbage is bought by an overpriced and shiny company, that is garbage.

larrys 13y ago
"selling overpriced shiny garbage " People are free to try to locate that "shiny garbage" and buy it cheaper but yet some people continue to purchase those things from skymall either because they are a) in a hurry b) money is no object c) product is unique enough that it can't be easily found Here's a question. One of the problems people have is app discovery. What if there was a magazine onboard airplanes where you could advertise cost effectively and get distribution for an app? Wouldn't you see that as providing some value just like any advertising?
- Afforess 13y ago
  They have a captive audience (bored passengers in airlines) and the shiny things they sell appeal to consumers with no self-restraint. The value they provide is nearly zero. They exist and make money due to a complete lack of competition and an endless stream of idiots. I say good riddance.
  - larrys 13y ago
    "shiny things they sell appeal to consumers with no self-restraint." Where are you drawing this conclusion from? Perhaps there are people who like to spend money and buy things because it gives them a rush and makes them feel good. Same as people will spend money on other feel good things (like a ball game or a concert, a movie or a play or play an online game). What exactly is wrong with buying "shiny things"? And they don't lack competition as many of the things in the catalog can be located elsewhere. After all you still need to order and have it shipped to you. Look stores in the terminal have a business model that depends on a captive audience as well and the pricing for many items is certainly higher than it would be in other locations. Why shouldn't it be? This is capitalism and there is nothing wrong with it at all.

eksith 13y ago

Funny thing is, I've browsed through for some ideas for electronics projects (not to use as-is, mind you, just to fiddle with) and found parts at wholesalers. What can I say, they were a handy supply of barely usable, often unnecessary rubbish, but as a museum of oddities and bad ideas, it was rather inspiring.

ErikAugust 13y ago

Xhibit's "Twityap": http://www.twityap.com/ http://www.twityap.com/ What an insulting joke. Looks like their Twitter account was suspended: https://twitter.com/TwitYap https://twitter.com/TwitYap Elancer from Punjab who put the app together has a couple screenshots: https://www.elance.com/samples/twityap-android/71857479/ https://www.elance.com/samples/twityap-android/71857479/ Totally funny stuff...

andrewflnr 13y ago
In any other context I would have assumed anything named "twityap" was a parody. I'm still having a hard time believing it's not.
reedlaw 13y ago
How is it that Xhibit has so many faces on it's About Us[1] page but they still had to hire an elancer? Did they make the iOS version and out-source Android development? 1. http://www.xhibitcorp.com/about-us http://www.xhibitcorp.com/about-us
- 3825 13y ago
  That sounds about right. There is no mention of the word Android on the page that I could find.
- sgustard 13y ago
  Their engineering office is in Bosnia. Source: http://www.linkedin.com/profile/view?id=84644729 http://www.linkedin.com/profile/view?id=84644729
  - ErikAugust 13y ago
    Right, and I think their "office" is just devs they work with on Elance, really: https://www.elance.com/s/mirkoj/ https://www.elance.com/s/mirkoj/
- unreal37 13y ago
  Why do they have Facebook Like buttons for each of their employees? Is this a corporate website, or Hot or Not?

awongh 13y ago

twityap?!? you can't make this stuff up. It's sad that this might work to get people to part with their money.

rohin 13y ago

Author here. We published this about a month and a half ago so the stock price information in the post is out of date. Since then, the stock price of the acquiring company (XBTC) has fallen roughly in half. http://finance.yahoo.com/echarts?s=XBTC+Interactive#symbol=XBTC;range=2y http://finance.yahoo.com/echarts?s=XBTC+Interactive#symbol=X...

dmix 13y ago
So they're basically a company doing adwords PPC/CPA (cost-per-action) campaigns and they managed to become public via reverse takeover? A big portion of the PPC industry has always been shady. I build software for diabetics and constantly came across highly-optimized landing pages promising to cure diabetes for $99. With highly questionable diets or videos. They buy up all the expensive adwords health keywords (competing with big pharma), so they must be raking in money. I also have friends who worked as adwords marketers for people making millions selling non-FDA approved health products (for ex. cleansers and skin bleaching products).
- callmeed 13y ago
  My wife got scammed by one of those nutraceutical "trials" once. You get some sample pills on a 14-day trial. The phone number to cancel the trial is disconnected. 14 days later, your card gets charged $80. I've noticed a lot of them advertising on Facebook.
  - 3825 13y ago
    did you try to charge back?
    - jusben1369 13y ago
      He may not of but apparently a lot do per the article and 10-K )
throwaway9848 13y ago
Is there any reason you know for the decline outside of your article? Has the merger hit snags since then? Did you ever look into the 10%+ beneficial holder "XSE LLC".

skybrian 13y ago

I think the most plausible scenario is that SkyMall wasn't a good investment to begin with, so their private investors dumped them. We have no hard numbers. Magazine advertisers often don't pay list price for ads and their expenses are private deals with the airlines, who are likely to drive a hard bargain if they can. And I'd be skeptical about how many people actually read them regularly; a survey commissioned by the company could be exaggerated or flawed in some way.

jwheeler79 13y ago

From their 10-K: "We owe $375,000 at a fixed interest charge of ten percent (10%) regardless of the time of repayment to four shareholders due March 31, 2014" That means they issued a 10% bond sale that four dumbshits, already holding common shares, bought into. A 10% bond! When spain was on the verge of insolvency, they were issuing bonds at 7%

ratsbane 13y ago
This is crazy. "fixed interest charge of ten percent (10%) regardless of the time of repayment" Does that mean, as it sounds, that the interest is $37,500 whether they pay it back in ten days or ten years? I realize it's due March 31, 2014, but if it's not paid by when it's due, no more interest accrues?
- pbhjpbhj 13y ago
  I don't know anything about the specifics here but if it helps interest that is fixed is fixed pro term. So "fixed interest mortgage rate of 5%" is actually 5% per annum. If they don't pay it back they continue to accrue a [presumably compounded] 10% charge.

toble 13y ago

Couldn't there be lots of other reasons? Like the current owners may have been forced to do it? From reading the article, I got the impression that this business was being passed around like a toy. Are the previous owners indirectly linked to investors in the airlines that carry the catalogue? Or members of the same club? I think I have watched too many detective shows, but there you go.

aresant 13y ago

Here's what I think happened: a) Xhibit has built a solid digital agency team on the back of nutraceutical affiliate marketing offers, and enough revenue to support a trailing $300 - 500m valuation. But they realize their business isn't sustainable, and want to unlock the value of their team & experience with a larger play. They have failed at doing this with their own projects. b) Najafi Companies, that originally owned Skymall, recognizes that the continued move to digital will eventually, and probably quite rapidly, decimate what is effectively a print advertising business in Skymall. They need a forward looking strategy, and a team that can execute said strategy ASAP. c) Given that both companies are in Phoenix, a fit is recognized, and Skymall's recently appointed CEO Kevin Weiss is named CEO of the merged organizations. They sign him to a 5-year agreement to develop the digital strategy for Skymall and, given his background at "Author Solutions" which shows his experience in transitioning print-to-digital, this makes sense. d) They hatched this plan when Xhibit's CEO met Skymall's CEO standing in line to use the restroom at a Phoenix Sun's game (a team that Najafi Companies has an investment in). (1) http://biz.yahoo.com/e/130621/xbtc8-k.html http://biz.yahoo.com/e/130621/xbtc8-k.html

rohin 13y ago
I'd suggest listening to this interview with the the CEO of Xhibit for even a few minutes to get a sense of the kind of "value" their team is bringing to the table. http://www.youtube.com/watch?v=bfA165MFcBI http://www.youtube.com/watch?v=bfA165MFcBI
- acchow 13y ago
  His meandering string of banal platitudes and buzzwords is seriously next level: "I personally refer to Xhibit as a multi-dimensional digital ad agency. Our gaol was to build a company with combined strengths of design, development, and distribution, to be a one stop shop for a clients digital marketing and advertising needs. Our synergistic array of software suites, tools, and offerings have been engineered from the ground up to help companies maximize results from digital strategies. I really want to emphasize results, Nick. Since we build our concepts from the ground up to help businesses maximize revenue, I always have the belief that if a client made money from a marketing campaign, they will in turn spend more money. This is why we have integrated some performance result models into our work today. The long term success any business or product relies on monetization."

cpks 13y ago

Last time I saw something like this, threats from the Russian mafia to the selling party were involved. No kidding.

lifeisstillgood 13y ago

Isn't the simplest explanation the best? SkyMall was simply made an offer they couldn't refuse. Don't sell horses heads in the magazine do they?

adamtait 13y ago

I guess when Priceonomics finds their business model has also fallen on hard times, they can resort to ... uh ... journalism.

chipsy 13y ago

As someone who has had the misfortune of holding this type of scam stock in the past, I have great sympathies for the shareholders. There are all sorts of ways you can find yourself holding a worthless investment(myself, via the entreaties of an overly enthusiastic and gullible friend) but once you have it, the rationalization machinery is going to kick in deeply, because now you're a sucker, and you really don't want to feel like one. That's why there's often a lot of online noise generated around obviously bad companies like Xhibit - it only takes the slightest big of hope to keep people in as the price plummets.

throwaway9848 13y ago

According to Yahoo! the Xhibit CTO makes $3K/year. Three thousand dollars. http://finance.yahoo.com/q/pr?s=XBTC+Profile http://finance.yahoo.com/q/pr?s=XBTC+Profile

circa 13y ago

So Xhibit is faceblock?

unreal37 13y ago

Option #4, the old owners of Skymall financially benefit from the deal regardless of the up and down of the stock price. What if current holders of xhibit stock are the ones getting scammed here?

andyakb 13y ago
How would that be the case?

cmccabe 13y ago

I thought Xhibit was a rapper or something. Also-- Twityap? Is that for real?

dschiptsov 13y ago

Nothing to see here. In general, being a cheater is much more efficient strategy than being a working drone, and, on the other side requires much less actual skills. This is why, for example, so many people struggling to create an appearance of competence and success, without actually possessing any appropriate skills or qualities. Their overconfidence sometimes fools simpleminded neighbors. Creating an empty-shell companies based on buzzwords, bandwagon effect and spikes of mass hysteria in order to gain ballooned valuation via media campaigns and staged "acquisitions" is a normal practice nowadays. The nonsensical valuation of companies such as Zynga are canonical examples. Using just appearance and media manipulations to create an association between few buzzwords, a brand and ignorant snap-judgement - "oh, that is a cloud virtualization mobile stock" or, you know, MongoDB - "instant gratification and productivity (of ignorant)" is a new-normal. The exit strategy could be a fail fail due to "bad economy", while pocketing all the money, or, if lucky, sale to a bigger fool, but first one is much easier.